Public is urged to fight Westar deal

Feb 8 - McClatchy-Tribune Regional News - John Green The Hutchinson News, Kan.

A proposed settlement in Westar Energy's latest customer rate case would grant the utility a $50 million annual increase in electric rates, of which more than 80 percent -- or $41 million -- residents and small businesses would have to pay.

The Citizens' Utility Ratepayer Board, which represents the public in utility rate cases in the state, indicated it will fight the agreement and called on the public to do so also, through calls or emails to the regulatory agency.

Kansas Corporation Commission staff filed the agreement late Monday. The public still has today to comment on the case, but then the public comment period closes. The KCC will take up the settlement at a technical hearing on Monday.

The agreement, if approved, would mean about a $4-a-month hike in average residential rates, or a $6 increase in summer rates, according to estimates by the Citizens' Utility Ratepayer Board, or CURB.

Westar had sought a $90.8 million increase. In its initial filing, KCC staff has recommended an increase of just $33.64 million, while CURB proposed an $11 million rate decrease, based primarily on cutting shareholder profits from 10.5 percent to 8.5 percent and eliminating executive bonuses.

The settlement agreement includes a 10 percent "return on investment" for shareholders and leaves some $14 million in executive bonuses intact. The agreement also does not alter a separate environmental cost recovery rider Westar will continue to collect.

Other expenses in the rate hike include $10.91 million for an expanded tree-trimming program and expenses related to employee pensions and compensation.

"If there is one thing we heard very clearly from Westar's customers at the public hearings is that a 10 percent shareholder profit is simply unacceptable in these difficult economic times," said David Springe, Consumer Counsel at CURB. "I expected Westar to be tone deaf to this outcry, having requested a 10.6 percent shareholder profit, but I'm truly surprised by the KCC staff also being tone deaf."

Every 1 percent change in shareholder profit equals about $30 million in customer rates.

If the KCC approves the settlement as proposed, Westar rates will have increased some $438 million since 2008, with additional rate hikes related to plant upgrades still expected to be approved this year.

Signing off on the agreement were Westar, the KCC staff, Kroger Corp., and a group of large industrial customers including Boeing, Spirit Aerosystem, Hawker Beechcraft, Cargil Inc., Occidental Chemical and Coffeyville Refinery.

Kroger and the industrial group had filed their own arguments in the rate case, contending homes and small businesses should bear most of the rate increase.

Under the proposed settlement, residential customers will pay 55 percent of the hike, or $27.49 million, while small business would cover $13.55 million, or 27 percent.

Kroger and other "medium general service" customers, such as Walmart, as well as the "high load" industrial users, would each pick up $3.93 million of the increase. School districts would bear the lightest burden, with an overall $600,000 hike.

The agreement also allows Westar to file another abbreviated case within one year to begin recovery of Westar's half of environmental expenditures at the La Cygne coal plant, or some $600 million.

"At some point, these electric rate increases are going to make it impossible to do business in Kansas," Springe said. "We're going to drive away business, drive away jobs and eventually drive away Kansas citizens.

"If there was ever a time for the public to stand up and make its voices heard about these never-ending electric rate increases, this is it," he said. "Only 800 people contacted the commission so far, out of 640,000 Westar customers. If the public doesn't care enough to be involved, the commission won't care enough to lower rates."

The $50 million would increase rates overall by 3.6 percent, according to Westar. For residential customers, the rate would be about 4 percent, and for small businesses, 4.5 percent, the company stated.

A spreadsheet from CURB shows that the residential rate for a customer in Westar's northern district, which includes Hutchinson, using a typical 1,500 kilowatts of summer energy -- excluding any increases in the cost of gas -- has climbed from about $123 in 2008 to $169 this year, if the $50 million is approved, which is a more than $45-a-month increase.

"Six dollars doesn't sound like a lot," Springe said. "But when you add it to the $6 here, and $3 there and $2 there, pretty soon it adds up to the 37 percent residential rates have gone up since 2008. That's what people need to understand."

To submit comment in the rate case, contact the KCC by emailing public.affairs@kcc.ks.gov or calling 1 (800) 662-0027. Reference KCC Docket No. 12-WSEE-112-RTS. The public comment period on the current rate case ends today.

To subscribe or visit go to: http://www.energycentral.com

To subscribe or visit go to: http://www.energybiz.com